Charting the economic and political repercussions of Neymar’s transfer

Last week and half, witnessed the long-drawn Neymar Junior transfer come to its conclusion. Yes, Paris Saint Germain finally got their jackpot, for a fee close to 220 million Euros, which would rise close to half a billion Euros with wages included. By the numbers being thrown around, if Neymar was a country, he would rank 206th in terms of GDP, ahead of Marshall Islands and Palau. In the soap opera that unfolded, Neymar’s record transfer fee from Barcelona was twice as much as the previous world record, set last summer when Paul Pogba joined Manchester United. With Qatar bankrolling PSG with its petrodollars, this post would analyse the economic and political ramifications that has shaken up the world of football in the aftermath of this deal of the century. Amidst all the hysteria surrounding the ‘moral hazards’ of clubs dizzying riches, this transfer has the possibility to recalibrate its intentions and responsibilities towards its supporters.

Failure of Financial Fair Play

The Financial Fair Play(FFP) rules were introduced in 2011 in response to growing concerns relating to global football’s overall financial health. These regulations were introduced by UEFA, which required clubs’ spending to match their earnings. It made it obligatory for clubs to avoid accumulating debts, by limiting the difference between their revenue and expense to a net loss of 5 million pounds. In the five year period leading up to the introduction of FFP, losses among Europe’s top division clubs had in fact increased 760%. Interestingly, PSG has been found to be in breach of FFP regulations in 2014 for spending 100 million Euros more than what they earned. Global finance, which uses modern football as an unregulated test laboratory, has allowed for clubs going around the FFP regulations. Something which the UEFA says is necessary to attract new investors. Clubs are now allowed to spend an additional 30 million Euros of their own money on a rolling three-year period to cover any excess spending. Consequently, FFP accounting allows for transfer fees to be paid over the length of a player’s contract. This way PSG might have the time to sell players in order to recoup the mammoth transfer fee. Otherwise, the deal could be done in a more creative way considering Qatar’s active involvement. In such a scenario, Neymar may already agree to become an ambassador for Qatar’s World cup for a fee resonating his current transfer fee. All these might be a smokescreen for PSG to arbitrarily raise their revenues. For all these reasons, there is ample room for criticism regarding FFP and its implications. The FFP rules have frozen the existing hierarchy in the top European leagues by preserving the status of the wealthy elite clubs at the top of the table, while limiting smaller clubs to rummage for their own meagre resources. Except for the English Premier League, the FFP has been unable to reduce competition, amongst teams in Europe’s top 5 domestic leagues.

Need for Economic Regulations

In this neoliberal economy, the soaring numbers being quoted in this transfer is beyond absurdity. More than being a numerical gimmick, the Neymar deal belongs to a moral, category. Similarities can be observed between the housing market scenario in Britain and the transfer of players between clubs. In both instances, a market-centred economy which tends to separate commodities from communities are irrational and therefore unsustainable. In a hypothetical scenario, a house worth £ 20,000 is now hovering in the region of £ 1.5 million. If put into context, Neymar’s reputed fee of £198m will be 138% more than the £89m Manchester United paid for Paul Pogba as recently as last summer. In 1981, the record transfer fee was just £1.75m paid for Paolo Rossi’s transfer to Vicenza. In the aforementioned cases, the inflation has been hundredfold due to spiralling costs of market in recent times. The inevitable consequences from the Neymar deal is acting as a domino effect in beefing up player prices. An already inflated transfer market has witnessed Kyle Walker and Benjamin Mendy become the most expensive defender in history following their moves to Manchester City and thus redefining the horizons of the modern transfer. Barcelona in their bid to overcome the loss of Neymar, have been touted to bid close to £100 million for the likes of Phillipe Coutinho, Kylian Mbappe and Paulo Dybala. Few years back such monumental figures were isolated instances of teams trying to sign a proven superstar of the game. The repercussion of the Neymar deal, has witnessed frantic transfer activities which will soon make £100 million the new normal.

It is notable that the Chinese Super League, started this trend of “realism” of marketisation, when we witnessed a mass exodus of big name players to the Far East during the last three years. In order to hold on to their star players, European clubs have channelled supporter’s money derived from ticket sales, merchandises and TV packages directly into the banks of superstar players and their princely agents. Neymar’s father coincidentally stands to make around £35 million from his son’s world record transfer. This habit of clubs justifying hiked transfer fees on the grounds of “investment” must change very soon.

In the aftermath of the dizzying excesses of the transfer market, like in another walks of society, there is a requirement for robust government regulation. It is even more pertinent, since clubs like PSG are backed by the Qatari government. Javier Tebas, the Spanish Football President has gone on record to claim Qatar’s bankrolling of PSG with financial injections tantamount to illegal state aid. In this regards, we can take a cue from the Chinese Super League, which has witnessed a sharp decline in inflated big name transfers. After witnessing the excesses from the teams in the Far-East, the Chinese government brought in strict regulations in place in order to promote local talent over and above poaching superstars from abroad. In order to curb the extent to which football’s profits are directed towards private interests, an interventionist programme must be promulgated and then implemented. Bayern Munich CEO- Karl Heinz Rummenigge has also promulgated the idea about a wage cap in European football. Presently EU regulations do not allow for wage capping, but Rummenigge believes that there is an appetite for change as the figures being thrown around reach dizzying heights. The 2017 Labour manifesto, makes an attempt to re-invest football’s wealth in the grassroots of the game. Jeremy Corbyn, the Labour leader has pledged in his party’s manifesto that 5 per cent of the Premier League TV rights should be diverted to the grassroots develop. Only such sort of ceiling can check the rising differences between the have and have nots of football’s profit makers.

Qatar’s political statement

Qatar Sports Investment, bought PSG in 2012. Over the last few years, the owners have brought in a plethora of high-profile names to the club, from the likes of Zlatan Ibrahimovic to global icon David Beckham. However, ‘coup de Neymar’ will undoubtedly trump all other signings in the club’s history. It is not just a mere transfer of gigantic proportions, this is a political statement by Qatar in the face of adversity. For the last few months, gulf countries, Saudi Arabia, UAE, Bahrain and Egypt have isolated Qatar by imposing embargoes for its alleged connections to terror outfits. In such a climate, Neymar’s signing will have the significance of a geo-political seismic shift. With the country on the brink of an economic meltdown, Doha would not flinch in spending half a billion euros on one of the biggest names in football and display its global financial clout. In the international relations circles, it is being touted that Neymar’s capture is just the start of a grand scheme of things to come from Qatar. Qatari Royal family and its aides are well aware that the oil rigs would not last forever. To sustain itself, Qatar is investing heavily in sporting avenues, the highlight of which has been the ability to secure the 2022 World Cup. Neymar would thus act as the beacon for a prosperous Qatar in the years to follow.

Making the game ‘beautiful’ again?

Amidst all the hype and hoopla surrounding the economic strains of this transfer, there lies hope. Modern football is increasingly rapacious commercial entity that is growing immune to the interests of its primary stakeholders- its supporters. More than being dismissive about the disenchanted fans, clubs must share a fraction of its wealth its fans. We live in time when the game is becoming a toothless commercial entity being immune to the regular concerns of its supporters. With so much money on offer, supporters still cannot go back from night games due to lack of transport arrangements. Clubs can easily help in arrangement of free transport during away games. Amidst sky rocketing season ticket prices, clubs can give bigger reductions to pensioners and children. Amidst the brouhaha of the Neymar transfer, Manchester United midfielder, pledged one percent of his salary to Common Goal, a collective fund that supports football charities around the world. In the same vein, he has called on other professional footballers to join him “to change the world”. Now is the time for the clubs to grasp this opportunity to give something back to the fans whose loyalties they have abused far too long.

About the Author:

Sarthak Roy is a 5th-year student of School of Law, Christ University, Bangalore. He has a keen interest in Public International Law, especially laws of war and use of force. He wishes to study public international law abroad, before coming back to India in the role of an academic, and a legal adviser to the Indian government. He always recalls his international law teacher for instilling the passion of international law and similarly wants to pass the same towards the young minds of future generations. He counts the works of Hersch Lauterpacht, James Crawford, Christopher Greenwood and Phillips Sands for being his constant motivation. In his final year of law school, he wishes to participate in the Jessup International Moot Court competition and test himself against the world’s best.